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1 July 2001

Company Profiles(HKTDC Electronic Components & Parts, Vol 03,2001)

Building Boards

Kotan Ltd

WITHIN
a decade, Kotan Ltd has joined the ranks of those leading makers of printed
circuit boards (PCBs) with the ability to produce single and double-sided products.
In the process, it has become a major supplier to the worldwide consumer electronics
and hi-tech industries.

The company's major markets in Asia include Japan, South Korea, Singapore,
Malaysia and Thailand. Outside Asia, it finds customers in the US, France, Germany,
Switzerland and Finland.

Kotan achieved a leading position through its steadfast adherence to complete
customer acceptability and satisfaction. "For this, we installed a programme
of quality assurance in our operations," says marketing manager Ray Leung.

As well as receiving quality certifications from various organizations, Kotan,
in 1997, gained membership of the US-based Institute for Interconnecting &
Packaging Electronic Circuits (IPC). "IPC membership provides a benchmark
of quality for our clients," Leung says.

In 1998, Kotan earned ISO 9002 certification. The company also has approval
from the US-based Underwriter Laboratories (UL). "We submitted our manufacturing
processes and materials to UL for safety tests on our processes," Leung
says.

The recent technology-sector downturn has not seriously affected Kotan since
its PCBs go to a wide range of markets. However, two years ago, the PCB product
range was narrower, and with PCB prices falling, the company's profit margin
started to decline.

"Hence, we diversified our product and service ranges and became a major
OEM supplier. Now our PCBs are tailor-made to meet customers' needs. When we
make PCBs, we make them with components and assemblies according to clients'
specifications," Leung says.

"Our quality inspection teams are at our clients' disposal, as well as
helping them to source from other PCB makers. In short, we solve all our clients'
PCB-related problems."

Under a long-term development strategy, Kotan is exploring new markets in
India, Russia and South Africa to find strategic partners and sales representatives.

"We see additional applications for our PCBs in the telecom sector and
in the development of Bluetooth technology. With a lot of new products being
developed, we continue to constantly evaluate new technology in order to outpace
market trends."

The company has invested substantially to improve after-sales service.

"We consider it unwise to follow the trend of some competitors in merely
cutting costs. We must find other ways to improve our profit margins, like increasing
production capacity. At the end of 2000, we doubled our capacity to 150,000
square feet of PCBs per month.

"We are looking at lowering operational costs by investing in quality
systems in order to have zero defects," Leung says.

By 2002, Kotan expects its auto systems to receive the QS 9000 quality standard
originally developed by General Motors and other US car-makers.

Kotan has cut turnaround time for samples from 4-7 days to 2-5 days. It has
quickened production turnaround from 5-6 weeks to 2-3 weeks. In special circumstances,
production turnaround can even be pared to one week.

In The Line of
Wire

Orient Channel Enterprises Ltd

IN
1991, labour costs and the need to operate a 24-hour production line prompted
copper-wire manufacturer Orient Channel Enterprises Ltd to move its factory
from Taiwan to Dongguan on the Chinese mainland close to Hong Kong.

According to sales manager Eric Lau, the move proved fortuitous since the
company trimmed costs and emerged as a leading producer of high-quality copper
wire.

In fact, Orient Channel is one of the world's largest makers of tinsel wire,
generating more than 136 tonnes per month. That figure is expected to grow substantially
in 2001 and 2002. Tinsel wire is specially designed for use in items requiring
high bending ability, such as telephone and power cords.

Production of tinsel wire involves a rigorous step-by-step procedure, Lau
explains. Initially, raw material is drawn from an 8mm copper rod and reduced
to a 0.1mm fine wire. The next stage is flattening the round copper wire to
a flat ribbon.

The third and most important step is covering the flattened copper ribbon
on top of a polyester thread called teteron. Strict quality control ensures
the copper ribbon covers the teteron evenly and smoothly. In a 24-hour cycle,
Orient Channel can produce about 0.5kg of the flat wire per spindle.

The final process in production of tinsel copper wire is called "twisting",
which simply means to twist a number of tinsel wires together according to specifications
from customers.

"Just like other manufacturers, Orient Channel is forced to reduce costs
in response to the recent economic slowdown. In the last two years, our company
has invested a lot of time and money in cutting costs. At the same time, we
are working hard to improve the quality of our products to maintain and increase
our market share" Lau says.

"As a supplier, we are aware that our customers also must reduce costs.
As part of this, we have studied different kinds of materials in the last few
years to make lighter copper wires. While we sell to our customers by weight,
our customers sell on the basis of length. By reducing weight, we can help our
customers to improve their margins," Lau says.

"We recognise that our customers' major concern is quality, so we invest
a lot of resources in monitoring the quality of our production materials and
processes," Lau adds.

Orient Channel's investment in quality control systems has paid off through
approvals from organisations awarding quality certification. In 1995, Orient
Channel won safety approval from Underwriter Laboratories for its enamelled
copper wire-making process. The following year, it obtained ISO 9002 certification.

As a leading copper-wire manufacturer, Orient Channel has reached annual sales
volumes of about US$38.5m (HK$300m).

The group has 800 employees at its mainland factory and another 20 at its
operations in Hong Kong. Orient Channel exports mainly to the Asia-Pacific region,
including Australia, South Korea and Singapore. Its European markets include
the UK, Germany, France, Italy, Sweden, Finland, Norway, Denmark and Hungary.
Orient Channel products also go to the US and South Africa.

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